Value stocks offer stability for investors by focusing on companies that seem underpriced compared to their actual worth. This approach involves looking for stocks with strong fundamentals and growth potential. By investing in these stocks, investors can achieve significant returns once the market recognizes their true value.
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One way to identify value stocks is by comparing a company’s price-to-earnings (P/E) ratio with industry averages or its historical P/E ratios. This ratio compares a company’s stock price to its earnings per share. It must be noted that a lower P/E ratio may indicate that the stock is undervalued. Along with this, we have zeroed in on stocks that have received “Strong Buy” ratings from Wall Street analysts.
Here Are This Week’s Stocks
Delta Air Lines (DAL) – This major American airline provides domestic and international passenger and cargo services. It has a Strong Buy analyst consensus rating and an average price target of $71.05, implying a 23.8% upside potential from the current levels. The company’s P/E of 8.45x reflects a 66.2% discount to the Industrials sector’s median of 25.01.
DAL stock was up 1.2% on Wednesday. The company is scheduled to report its third-quarter results tomorrow, October 9. Analysts expect Delta Air Lines to report earnings of $1.53 in Q3, up 2% from the same quarter last year. Meanwhile, analysts project Q3 revenues of nearly $15.06 billion versus $15.7 billion in the year-ago quarter.
Lithia Motors (LAD) – This automotive retailer offers new and used vehicles along with financing, repair, and maintenance services. Its average price target of $376.50 implies a 24.41% upside potential from the current levels. LAD stock has a Strong Buy consensus rating. Trading at a P/E of 9.29x, the company is valued 52.7% below the Consumer Cyclical sector’s median multiple of 19.66.
Last month, Lithia Motors raised $600 million through a private bond offering, up $100 million from its original plan. The money will help pay down its credit line, which could affect how flexible it is with future spending and acquisitions.
Axos Financial (AX) – This digital-focused financial services company offers online banking, lending, and investment solutions. It has a Strong Buy analyst consensus rating and an average price target of $102.75, implying a 22.69% upside potential from the current levels. With a P/E ratio of 11.23x, the stock is priced at a 14.9% discount to the Financial sector’s median of 13.19.
Last week, a couple of analysts raised their price targets on Axos after its $43.5 million acquisition of Verdant Commercial Capital, citing strategic fit and earnings upside. Needham sees stronger growth potential, while Keefe calls it a solid move within Axos’ M&A strategy.
What Is TipRanks’ Smart Value Newsletter?
TipRanks’ Smart Value Newsletter helps investors identify high-potential value stocks with strong fundamentals and long-term growth potential, based on TipRanks’ data and analysis. The newsletter, published weekly, includes macroeconomic, market-wide, and company-specific analysis to help investors understand the trends that affect value investing.
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